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Comcast Opens Home Automation Door To All Of Its Broadband Subscribers

Jeff Heynen, Greg Potter, Mike Paxton

The following post comes from Kagan, a research group within S&P Global Market Intelligence. To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Comcast Corp. took a bold step in the home automation platform battle earlier this month by expanding its Xfinity Home service across its entire broadband subscriber footprint. The company announced at CES, held January 9-12 in Las Vegas, that Xfinity Home, which started out as a home security product requiring a separate subscription, would be made available for free to all of its Xfinity broadband subscribers. The only caveat is that subscribers must have either the XB3 or XB6 xFi gateways, manufactured by Technicolor and ARRIS International plc, respectively. The xFi gateways, which debuted back in May 2017, were rolled out in December 2017 to every market where Comcast offers its gigabit service.

Kagan, a media research group within S&P Global Market Intelligence, estimates that the total addressable market for Xfinity customers located in markets where gigabit service tiers are offered stands at seven million as of October 2017. That figure represents 59.5% of the overall geography's total residential high-speed data customers. Also at CES, Comcast announced it had 10 million subscribers with xFi service at the end of 2017 and that the average xFi subscriber had 11 devices connected to their Wi-Fi network. At the end of the year, Comcast noted it had 1.3 million subscribers to the paid Xfinity Home service, so the expanded availability combined with the elimination of a separate subscription should go a long way in boosting home automation subscribers for the company. The expanded service is expected to be made available in late second quarter 2018.

The expansion of Xfinity Home fits within Comcast's larger plan of defining and controlling the user experience in the home. As we noted very early in 2017, Comcast has recognized that the residence is where a service provider has the most frequent interaction with its customers. It used to be a space where the service provider was the primary interface to the larger internet and all of its associated applications. But with major online retailers and consumer electronics companies, including Amazon.com Inc., Alphabet Inc.'s Google Inc., Apple Inc., and Roku Inc. also vying to be the home's central nervous system, Comcast realizes that the only way it can compete with these entities is to distribute its service control platform broadly. Additionally, Comcast must be completely hands on in the development of software and applications for its broadband services.

Voice capable remote controls, of which Comcast has shipped over 18 million, are a means of matching features with the very popular Alexa and Google Assistant ecosystems. Alexa and Google Assistant are already integrated into many smart TVs and streaming devices, and are adding support for a wide variety of internet of things, or IoT, devices. Giving a voice command such as "Alexa, play Netflix in the living room" that results in the TV turning on and resuming the last-played show on Netflix is a compelling feature that is currently not possible on pay TV systems. Comcast's Xfinity Home service supports many popular IoT devices, similar to the Google and Amazon assistants, while also notably supporting its Xfinity set-top boxes, or STBs. No word yet on whether Comcast will take an additional step to move voice control off of the remote and onto smart speakers.

XFi is a cloud-based home Wi-Fi management platform that delivers apps for Comcast's X1 STBs and xFi broadband gateways. XFi monitoring and performance apps can be used on Apple and Android devices. XFi is Comcast's platform for managing and delivering the broadband customer experience within the home — a notoriously challenging task given all the variables at play, including in-home wiring, peripherals, and sources of interference, such as hair dryers and microwaves. All of these can have a significant impact on the performance of home Wi-Fi networks. All of them can lead to unnecessary and costly troubleshooting calls.

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Comcast is betting that, if it can reliably and consistently solve customers' in-home Wi-Fi issues, it will give their customers more confidence in the performance and reliability of home automation devices, including smart thermostats, voice assistants, smart plugs and smart security systems, among others. Comcast's plan of providing the Xfinity Home service for free should also expose its broadband customers who previously had little interest in home automation to a simple dashboard to nudge them closer to purchasing smart home products.

Comcast is also offering a "Works with Xfinity Home" program to certify home automation products from a range of suppliers with the goal of making it easier for broadband subscribers to choose from the growing list of devices and sensors. The list currently includes products from Nest, ecobee, August, Chamberlain, and others.

We fully expect other U.S. service providers to jump into the home automation arena through a self-developed platform, via acquisition or possibly via licensing the Xfinity Home solution directly from Comcast. The company has already licensed its X1 platform to a number of major North American cable operators, with Cox Communications Inc. and Rogers Communications Inc. both licensing Comcast's Xfinity Home platform.

For all these operators, home automation represents the next big opportunity to cement their placement in subscribers' homes. While revenue for these platforms will be hard to come by in the next few years, the goal of providing the central control point for a wide range of devices and sensors is to get customers comfortable with the platform, of course, but also with the whole idea of home automation. Over time, Comcast can introduce multiple tiers of home automation and control, including bundling either passive or active home monitoring for a monthly fee.